Any changes made in regulation, he said, should ``still allow for the continued evolution`` of the domestic and foreign markets.

He seemed to be cautioning against the adoption of measures that might be too restrictive and hamper the markets` ability to adjust to changes in the economy and other outside influences.

Greenspan also said he sees no danger of a recession soon, barring ``an extraordinary set of unexpected events.``

In addition, the Fed chairman said he hopes that the House Banking Committee will move soon to adopt legislation similar to a bill overwhelmingly passed by the Senate recently that will allow banks to invade the securities business and other nonbanking fields.

Though he said there were 75 opinions among the 51 members of the House committee about what should be done, Greenspan said he believes committee Chairman Fernand St Germain (D., R.I.) wants to adopt a bill that would

``clear away the almost unpenetrable underbrush`` of bank legislation.

Many studies made since the stock market crash Oct. 19 have suggested a need for reform of the stock and futures markets, Greenspan said at a conference on bank structure sponsored by the Federal Reserve Bank of Chicago. But he said that ``a coordinated regulatory approach`` is needed, because each of the markets ``is really only a component of one integrated market valuation system.``

A report due Wednesday by the Presidential Working Group on Financial Markets is expected to deal with the feasibility of an ``interagency approach`` to the problems that cut across the markets, he said. Greenspan is a member of the panel, along with the heads of several other agencies.

In discussing changes in the banking industry that have occurred or are expected to take place soon, Greenspan said he believes ``we are looking at a major moment in the American financial industry.``

``If banks are to remain viable competitors in the future, they must be allowed to evolve along with the market,`` he said.

Greenspan said he strongly supports a bill sponsored by Sen. William Proxmire (D., Wis.) to repeal most provisions of the Glass-Steagall Act, which prevents banks from entering the securities business and competing in other fields, such as insurance sales.

One of the bill`s most attractive features, he said, is that it would permit ``a market-driven evolution of financial services and products.``

Greenspan said he hopes the House will take the same approach, rather than granting banks ``only specific, limited securities powers`` that could soon become obsolete.

Silas Keehn, president of the Chicago Fed, earlier told the meeting that legislative changes in such banking laws are ``long overdue.``

Though new powers for banks would lead to greater efficiencies and new sources of business, Greenspan said they were unlikely to result in ``unusual short-term gains in bank profits.``

He said greater competition between banks and their financial rivals probably would shrink profit margins for both, at least temporarily.

But he said the narrower margins also would mean that consumers would benefit from a wider array of financial services made available at lower cost, plus a stronger and safer banking system.

In a question period after his speech, Greenspan refused to comment on the Fed`s monetary policies or the outlook for interest rates.

But another member of the Fed board, Wayne Angell, said in Washington that he saw no reason to change the monetary policy.

Angell hinted in a speech to the Independent Petroleum Association of America that the Fed may not tighten policies further, as many market observers expect.

``Right now, I don`t think things call for any drastic action,`` he said. ``If that were the case, we would have acted.``

At the Chicago conference, Fed Gov. Martha Seeger took issue with those who believe that the economy is expanding rapidly and approaching capacity constraints.

``I don`t read all the indicators as excessively strong,`` she said in response to reporters` questions. She cited the decline in April retail sales and disappointing chain store sales for April.

Greenspan, in saying a recession is unlikely soon, said he saw ``very little evidence of the types of imbalances`` in the economy that would lead to a downturn.

``But we have never repealed the business cycle,`` he said. ``Forecasting at best is fraught with luck and not insight.``

The Fed chairman also said he was reluctant to comment on the financial troubles in the savings and loan industry, except to say that the Fed is in the position of ``monitoring the overall financial system.``

But Greenspan said he would not oppose granting additional powers to thrifts as well as to banks.